HHS to Probe Skyrocketing Generic Drug Prices

Tuesday, April 14, 2015

WASHINGTON, April 14 – At the urging of Sen. Bernie Sanders (I-Vt.) and Rep. Elijah Cummings (D-Md.), the Department of Health and Human Services inspector general has agreed to investigate how sudden price hikes by generic drug makers are driving up the cost of taxpayer-supported health care.

“It is unacceptable that Americans pay, by far, the highest prices in the world for prescription drugs. Generic drugs were meant to help make medications affordable for millions of Americans who rely on prescriptions to manage their health needs. We’ve got to get to the bottom of these enormous price increases,” said Sanders.

“It is outrageous that skyrocketing prices of generic drugs are preventing patients from getting the medications they need,” said Cummings. “I am very pleased that the inspector general has agreed to investigate how these price hikes are driving up costs to taxpayers.”

As part of their own congressional investigation, Sanders and Cummings asked generic drug makers to turn over records on prices. The companies refused to provide meaningful records. Federal law, however, requires pharmaceutical firms to provide price data to HHS, so Sanders and Cummings formally requested the investigation by the department’s inspector general.

It’s already known that nearly 10 percent of generic drugs more than doubled in price in a recent year. That finding comes from an analysis of Centers for Medicare and Medicaid data, which also found half of all generic drugs went up in price from July 2, 2013, and June 30, 2014.

In their letter to the inspector general, Sanders and Cummings said the use of generic drugs by Medicaid and Medicare beneficiaries traditionally has resulted in savings for the federal government. But the lawmakers said recent cost spikes are preventing some patients from getting the drugs they need.

Sanders and Cummings have proposed a way to cushion the impact on taxpayers when makers of generic drugs raise prices at a rate that is greater than inflation. When that happens now, current law requires brand-name drug companies to pay a rebate to Medicaid. Sanders and Cummings want that same rebate provision to cover generic drugs as well. The non-partisan Congressional Budget Office has estimated that change would save taxpayers $1 billion over 10 years.